Question

A. The Cycle Shop sells merchandise on credit terms of 2/ 10, n/ 30. Merchandise that cost $ 900 was sold to Claudette Labelle on February 1, 2014, at $ 1,600. The company uses the gross method of recording sales discounts.
Required:
1. Prepare the journal entry to record the credit sale. Assume that the company uses the perpetual inventory system.
2. Prepare the journal entry to record the collection of cash from C. Labelle
(a) On February 9, 2014
(b) On March 2, 2014.
B. On March 4, 2014, the Cycle Shop purchased bicycles and accessories from a supplier on credit for $ 8,000; the terms were 1/ 15, n/ 30. The company uses the net method to record purchases.
Required:
3. Prepare the journal entry to record the purchase on credit. Assume that the company uses the perpetual inventory system.
4. Prepare the journal entry to record the payment of the invoice
(a) On March 12, 2014
(b) On March 28, 2014.